Misreading Tariffs Can Be Costly -ITIC

Posted by Michelle HowardNovember 21, 2016

Photo: ITIC

International Transport Intermediaries Club (ITIC) says the misreading of tariffs in shipping documentation is a common cause of costly claims.

ITIC cites the case of a South American port agent asked by the owners of a vessel to provide a quote for the costs of discharging a shipment of project cargo. The agent reviewed the port authority’s official tariffs, and advised the owners that the stevedoring costs would be $28.90 per metric tonne of cargo.

The cargo weighed 296 metric tonnes, so the owners calculated the stevedoring costs at approximately $8,500 and quoted that in turn to the charterers of the vessel. The voyage was duly fixed on that basis.

After the cargo had been discharged, the stevedores invoiced the agent for the sum of $130,000. When these costs were questioned by the owners, the agent realized that the $28.90 rate it had quoted to the owners was the rate per cubic metre, not per metric tonne. It was apparent that the agent had simply misread the port tariff document. After discussion with the agent, the stevedores agreed to offer a discount on the costs, and the claim, which was covered by ITIC, was ultimately settled for $75,000.

ITIC points out that claims often arise from misread tariffs. In another recent case, ship agents in Australia quoted the incorrect port charges for a local port to their customer. The customer then fixed on that basis and suffered a loss of AU$86,000. The claim against the agent was reimbursed by ITIC.